Strong fourth quarter results, including 32% year-over-year growth in contracts, helped cap “the strongest fiscal year ever” for Toll Brothers, according to chairman and CEO Douglas Yearley.
The home builder generated record home sales revenue of $10.6 billion in the full fiscal year, earned $15.01 profit per share and grew contracts 27% year over year in both units and dollars.
In the fiscal fourth quarter, Toll Brothers generated profit of $475.4 million, or $4.63 per share, and delivered home sales revenue of $3.26 billion, a 10% year-over-year increase. The builder delivered 3,431 homes in the fourth quarter, a 25% increase compared to the fiscal fourth quarter of 2023.
“We also signed 2,658 net contracts [in the fourth quarter] at an average price of $1,000,000, up 30% in units and 32% in dollars compared to last year’s fourth quarter,” Yearley said. “Our performance this year and in the fourth quarter demonstrates the power of our luxury brand, the financial strength of our buyers, and the success of our strategies of increasing our spec home production and widening our geographies, price points, and product lines.”
During the company’s earnings call, Yearley said while affordability is a broader housing market issue, Toll Brothers’ more affluent buyers are less impacted by affordability concerns. In the fiscal fourth quarter, approximately 28% of buyers paid all cash, well above the long-term average for Toll Brothers of 20%. Of the 72% of Q4 buyers who took on a mortgage, Yearley said such buyers put down an average of 31% on home purchases. The cancellation rate for Toll Brothers in the fourth quarter remained low at 2.5%.
On a per-community basis, Toll Brothers reported 2.2 orders per month in the fiscal fourth quarter, up from 1.9 orders per month in the fourth quarter of 2023.
Yearley said the builder’s mix between built-to-order and spec homes was nearly 50-50 and incentive levels in the quarter were 6.7% of average sales price. The level of incentives was above Toll Brothers’ recent average of 5% to 6%, in part due to rising mortgage rates and election uncertainty. He said the company is optimistic that incentive levels can be reduced and base prices can be increased ahead of the start of the spring selling season in January.
“Since the start of our fiscal 2025 six weeks ago, we have seen strong demand, which is encouraging as we approach the beginning of the spring selling season in mid-January,” Yearley said. “We are well-positioned with communities in over 60 markets across 24 states featuring the widest offering of luxury homes and serving the most affluent customers in our industry. Last year, we increased community count by 10% and are targeting a similar increase in fiscal 2025.”
Toll Brothers ended the fiscal year with a 5,996 homes in backlog representing a value of $6.47 billion, declines of 9% and 7%, respectively, compared to the end of fiscal 2023. The company ended the fiscal year with 74,700 owned or controlled lots, of which 55% were optioned. Yearley said Toll Brothers is making positive progress toward achieving an overall mix of 60% optioned and 40% owned lots.
